Deregulation vs. Fannie & Freddie

Here's a good discussion on the subject which I participated in (my screen name is "willamettevalley").

Auto Worker Compensation, Walmart vs. Costco, Health Care

I signed up to blog over at The Next Right.

Here's my first post and comments. I apologize for the other commenter's language.

VIRAL: A Little Gun History Lesson

Got this email forwarded from a friend. Fact-checked it as good as I could. I did cut out some questionable Australia statistics which Snopes has partially debunked. The Australia part has been floating around since 2001. The rest seems to have gone viral sometime late in 2007 as best I can tell. I wholeheartedly agree with the sentiment. Here it is:

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In 1929, the Soviet Union established gun control. From 1929 to 1953, about 20 million dissidents, unable to defend themselves, were rounded up and exterminated.

In 1911, Turkey established gun control. From 1915 to 1917, 1.5 million Armenians, unable to defend themselves, were rounded up and exterminated.

Germany established gun control in 1938 and from 1939 to 1945, a total of 13 million Jews and others who were unable to defend themselves were rounded up and exterminated.

China established gun control in 1935. From 1948 to 1952, 20 million political dissidents, unable to defend themselves, were rounded up and exterminated.

Guatemala established gun control in 1964. From 1964 to 1981, 100,000 Mayan Indians, unable to defend themselves, were rounded up and exterminated.

Uganda established gun control in 1970. From 1971 to 1979, 300,000 Christians, unable to defend themselves, were rounded up and exterminated.

Cambodia established gun control in 1956. From 1975 to 1977, one million 'educated' people, unable to defend themselves, were rounded up and exterminated.

Defenseless people rounded up and exterminated in the 20th Century because of gun control: 56 million.

You won't see this data on the US evening news, or hear politicians disseminating this information.

Guns in the hands of honest citizens save lives and property and, yes, gun-control laws adversely affect only the law-abiding citizens.

Take note my fellow Americans, before it's too late!

The next time someone talks in favor of gun control, please remind him of this history lesson.

With Guns...........We Are 'Citizens'.
Without Them........We Are 'Subjects'.

During W.W.II the Japanese decided not to invade America because they knew most Americans were ARMED!

Note: Admiral Yamamoto who crafted the attack on Pearl Harbor had attended Harvard U 1919-1921 & was Naval Attaché to the U. S. 1925-28. Most of our Navy was destroyed at Pearl Harbor & our Army had been deprived of funding & was ill prepared to defend the country.

It was reported that when asked why Japan did not follow up the Pearl Harbor attack with an invasion of the U. S. Mainland, his reply was that he had lived in the U. S. & knew that almost all households had guns.

If you value your freedom, Please spread this anti-gun control message to all your friends...!

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FYI, the exact quote from numerous sources for Admiral Yamamoto was: "You cannot invade the mainland United States. There would be a rifle behind every blade of grass."

And here's another money quote:

"Laws that forbid the carrying of arms . . . disarm only those who are neither inclined nor determined to commit crimes . . . Such laws make things worse for the assaulted and better for the assailants; they serve rather to encourage than to prevent homicides, for an unarmed man may be attacked with greater confidence than an armed man." --Thomas Jefferson

Please, No Bailout for Detroit

I was listening to the Jim Bohannon Show on the radio and wrote him an email with the following points. The points may seem a little incoherent without the context of the discussion on the radio, but here they are:

Foreign-owned car companies are still American companies. They have American plants that employ American workers that build cars for the American market. When foreign companies have physical money-making assets in America, it makes them much more reliant upon us than it makes us reliant upon them. The assets are physically in OUR country. Foreign goverments are much less likely to take actions against our interests if they have investments in our country. Would you pick a fight with someone who had some of your valuable possessions?

It's not like consumer demand for autos will go away completely. Sure, demand is down right but it will bounce back, and demand for car repair services will remain too. If one or more of the "Big 3" lose market share, that is because people are freely choosing to buy other companies cars. If one companies went out of business completely, the rest of the companies would be strengthened.

There will still be a need to build cars. The question is really who builds them where. Michigan, with their anti-business policies and over-protection of the harmful auto unions (harmful to running a profitable business) will lose jobs, but numerous other states where Toyota, Honda, and Nissan produce cars will gain jobs. A bailout will simply subsidize Michigan's bad choices and transfer the costs of their economic decisions to the rest of the US taxpayers.

Sure, the credit crunch hurt the auto industry as a whole, and the weakest companies may not, and should not survive, at least not without restructuring. We've got to get away from subsidizing bad businesses and thereby removing the incentive for change.

A bankruptcy would help the Big 3 break free of some of the crippling constraints put on them by the unions. The Big 3 total labor cost per employee is $73/hr., while Toyota, Honda, and Nissan average $44/hr, and the average American worker recieves $29/hr. Chrysler employees get 35 days of paid vacation/holidays per year. Employees are paid even while laid off, and there are even more retirees receiving generous pensions than there are employees receiving generous pay for 35-40 hrs/week of work.

The Big 3 also suffer from a productivity gap with the Toyota, Honda, and Nissan. The Big 3 have been getting better but still lag behind. That is, they take 20% more worker hours to produce a vehicle.

Given all of this, I am opposed to my money going to pay union salaries and benefits in Michigan.


Here are a few more thoughts beyond what I wrote to Jim Bohannon:

I am not without sympathy for those in Michigan and elsewhere around the country whose jobs would be affected by this, but the effect is not the "3 million" jobs being bandied about. That figure includes any job that is related to the Big 3 automakers, including repair centers and dealerships around the country. The fact is that if Big 3 cars will still need to be repaired, and if Big 3 dealerships close, then Toyota, Honda, Nissan, etc., will open more dealerships as their market share increases. And consumers will end up with cheaper, more reliable cars.

Further, if any of the Big 3 go bankrupt, it would not mean that every auto worker would lose their jobs. Obviously some would, but most won't. And whoever is satisfying consumer demand for autos and increasing market share will be hiring employees too.

The trouble some auto companies are having is simply not the same systemic threat that the financial sector crisis posed.

UPDATE: Romney concurs

MUST WATCH: How Obama Got Elected

Check out this interview of 12 Obama voters in Los Angeles, plus a nationwide Zogby survey of 512 Obama voters, to see how much they really knew about the man they were voting for.

http://www.howobamagotelected.com/

Also watch for how well they knew certain details about Palin vs. how little they knew details about Obama/Biden, plus how often they figure McCain or Palin must have done it if it was something bad that Obama or Biden did.

The point of the exercise is how pitiful the media is in this country in actual educating voters with facts. Don't waste another minute. Click the link now.

The Power of the Media

I spotted this article in the Telegraph which is a great reminder how much influence the media really has. People's view of the world can be incredibly incorrect based on what information they receive.

In this case the story is about Putin's Russia and how Russians believe their economy is flourishing even as it is crashing.

And sure enough, at a time when their country is locked in its worst financial crisis in a decade, they are more optimistic about the economy than they have ever been. According to opinion polls, 57 per cent reckon it is flourishing, up from 53 per cent in July.

The survey's findings are a triumph for the state, proving that the Kremlin has not lost its touch when it comes to manipulating fact. Obeying orders from the top, Russian television has banned the use of words such as "crisis", "decline" and "devaluation". Coverage of the mayhem in the country's stock market, where shares have fallen by 75 per cent since August, is scant.

When you look at a situation like this, you can begin to understand how a dictatorship can stay in power by manipulating public opinion. You realize that America's actions could have far less to do with how we are viewed by the world than what the media in individual countries around the world reports. That is, America may be viewed negatively by many countries around the world not for what we have said or done, but what governments around the world tell their people that we have said or done. And what is reported can be completely divorced from reality.

In America, the diversity of the media provides a good explanation for why we are so divided as a country. It is my conclusion that people's political views greatly rely on, or are reinforced by, which media outlets they get their news from. Of the people that pay attention, you have about 40% that primarily listen to talk radio, read conservative blogs/newspapers, and/or watch Fox News. There are another 40% that primarily watch ABC, CBS, NBC, CNN, or MSNBC, or read liberal blogs/newspapers. The remaining 20% watch/read/listen to a mix.

The reason for the country's division is that the two groups of 40% are not only fed a totally different set of opinions, but even a completely different (and conflicting) version of the facts. I don't have time to cite examples right now.

I would like to see a move toward more reasoned debate. Instead of news consumers remaining in their 40% bubbles, some outlets need provide a worthwhile discussion between both sides that goes beyond a 5 minute yelling match between hyper-partisans.

More on Emergency Rescue Plan

My view on the bailout for the financial sector is that the credit markets are a lot like gas supplies in that if there is a major shortage of liquidity (caused by the frozen credit market), the economy is going to seriously slow down (major recession), just as would happen to transportation if there was a major shortage of gas.

The government keeps a stockpile of petroleum in case of a gas shortage. When there is a shortage of liquidity, it is an rare emergency situation where the government needs to pump more money in (either by borrowing or printing money). The real debate then becomes how best to inject liquidity into the markets, or in other words, who do you give the money to? And that is the question very few people really have a good answer for.

I bet if you could ask Milton Friedman, he would have backed some form of capital injection into the markets. He blamed the Great Depression on the Federal Reserve printing less money after the 1929 financial crisis, where the Fed was trying to fight inflation. But a shrinking money supply will single-handedly cause a recession.

My view is that the frozen credit markets will lead to a large ineffiency in the economy, and even though I would oppose bailouts to specific companies 99% of the time because of the perverse incentives and distortion of markets they create, I think that is less a danger than the frozen credit markets were/are.

I don’t trust the government to handle the $700 billion, but what other choice do we have? Remember that Larry Kudlow, Steve Forbes, Tom Coburn, Paul Ryan, and even Newt Gingrich (after he pushed for a better bill) supported the $700 billion emergency rescue plan.

I think the cleanest way to inject liquidity would be to take whatever dollar amount you wanted to inject, and spread it as evenly as possible over the entire financial sector, including successful companies. Then, for the most part, let institutions fail if they still can’t make it. No more bailouts. No money for any other industry. No trough for the pigs to line up at. No rewarding failure.

Of course I can think of many problems with this proposal as well. What if successfuly companies use the money to buy up failing companies? Still better than a government bailout. What about creating a moral hazard for the financial industry as a whole? Still better than letting the entire economy suffer for the financial industry’s failure. What if the companies that still fail cause too much disruption in the economy? I don’t have a good answer.

MUST READ: Intolerant Liberals

You've gotta see the things that this 14 yr. old girl chronicled when she tried coming to school with a "McCain Girl" t-shirt in Chicago.

Obama's Plan for Community Service

While it sounds really nice and definitely has some benefits, community service is only economically beneficial to society as a whole when performed by people who would otherwise be less productive with their time. Too much community service can be a bad thing.

As an obvious example, no one would say that a construction crane operator’s time would be better spent doing community service while an entire construction project waits.

Obama’s plan requiring college students to do 100 hours of community service in exchange for a $4000 tax credit, would in effect be paying college students $40/hr. for their community service. At the same time, it would reduce college students’ involvment in the private sector, where they perform “college jobs” which benefit society more at less cost. It could also slow down their progress toward a degree if they take fewer credits.

The plan to expand Peace Corps could similarly be a less effective use of labor resources. Can someone explain to me what the Peace Corps does that is so valuable? From what I have heard anecdotally, a ton of money is wasted because many young adults enter the Corps as a way to travel the world and put off entering their careers.

As far as the middle school service in exchange for federal money idea, it is arguable that middle schoolers’ time could be better spent perfoming community service than playing video games. My guess is that Obama thinks this would be a great way to have a minor leagues for community organizers. I’m not sure, though, how diverting school resources and energy to a program like this would help raise test scores.

Change - Back to the Future

And it starts . . .

The AP reports that John Podesta, former chief of staff to Bill Clinton and currently head of Obama's transition team (the more things change, the more they stay the same), says that Obama plans on aggressively moving immediately after taking office to enact his refundable tax credits to lower and middle income earners (including those who pay no federal income taxes), increase government spending in some form as an "economic stimulus", provide government-funded health care insurance to those currently lacking health insurance, increase subsidies to economically-ineffecient alternative energy sources, and throw more money at public education.

Notice a strain running through all of these? Increased government spending, government control, and government interference in the free market.

(Obama refused to answer whether he would raise tax rates on upper income earners right away in his press conference this week.)

The Washington Post reports that Obama's team has identified over 200 Executive Orders they would like to immediately reverse. We'll have to watch closely to see what all this entails, but it looks like it includes shutting down oil exploration in Utah, providing federal funding for abortions in other countries, and increasing federal funding for unneccesary and unpromising embryonic stem-cell research.

Barack Obama in not change to something new; it is change back to the failed policies of the past.

I would like to see change back to the successful policies of the past: less government interference in our lives, lower taxes, restrained government spending, encouraging a strong family unit, and peace through strength. I would like to continue current successful policies of being on offense in the war on terror, increased accountability and choice in education, and beefing up security along the border.

Pros and Cons of Obama Victory

Pros:

• Hopefully this puts to rest any idea of prevalent racism still existing in America
• I won't have to try to defend McCain for the next 4 years
• Democrats are now in complete control and fully liable for anything they screw up
• I am optimistic that the policy changes over the next 2 years will remind enough fractured conservatives why they need to coalesce for 2010

Cons:

• Democrats will continue to make any opposition to Obama into some kind of racial issue
• Democrats are now in complete control (100 seat margin in the House, 57 seats in the Senate, plus the Presidency) and will not hesitate to screw things up
• Unless we can hold a filibuster together in the Senate, we'll see the elimination of secret ballots in union elections, rule changes in arbitration to favor unions, and growth of union contributions to Democrats
• The Free Choice Act will pass knocking down all state laws limiting public money for abortions, parental notification laws, waiting periods, informed consent laws
• The top 5% of income earners (not the top 5% of wealthiest people) will be soaked and their money will be handed out to low income earners as welfare in the form of refundable tax credits, providing less incentive for increasing productivity for both high and low income earners
• The capital gains rate will be raised in the interest of fairness, driving more capital overseas just when we need the capital the most
• The corporate tax rate will remain tied with Japan at 35% as the highest rate in the world, encouraging corporations to move or expand overseas, costing us in jobs and more expensive goods and services
• 2-3 liberal Supreme Court justices will likely retire so they can be replaced by like-minded activist judges -- we will lose the chance to reshape the Supreme Court for another generation
• The entire federal court system, which was just getting back to about even, will tilt back liberal again -- my prediction is we won't be able to hold a filibuster in the Senate to stop this because of folks like John McCain, Lindsey Graham, Olympia Snowe, Susan Collins, Mike DeWine, Orrin Hatch, etc.
• We will get more decisions legalizing gay marriage, expanding the definition of hate crimes, banning guns, coddling terrorists, eroding private property rights, etc.
• The "Unfairness Doctrine" (as I call it) will be reinstituted to try to dilute conservative talk radio
• Government spending will grow even faster than it has for the past 8 years
• We may or may not continue to leave Iraq responsibly and may or may not keep our commitments in Afghanistan
• We will start moving in the direction of government healthcare for all -- it will likely be gradual, people will move over to it as government offers free or cheap healthcare -- health care expenses will continue to skyrocket as market forces continue to be ignored
• Trial lawyers will get all kinds of goodies, allowing them to sue for this and that
• Who knows how the rest of the world will test Obama and how he will react
• Democrats will try to cut defense spending
• For at least the first year of Obama's presidency, Democrats will continue to blame Bush for anything that goes wrong

Now if this is not enough motivation to start organizing for 2010, I don't know what is!

"Emergency Rescue Plan"

That is what President Bush and Treasury Secretary Paulson should have called the $700 "bailout" from the start. By allowing it to be defined as a bailout, they automatically limited its popularity with the people, and thus lost Congressional support. There has never been a sustained concerted effort to explain it to the American people.

The original plan Paulson put forward was an asset purchase program where the government would buy up mortgage-backed securities and hold them until the market returned, and then sell them, potentially at a profit. The government would have likely recovered most of the cost or even made money on the program.

It was an emergency measure meant to thaw the credit markets which had completely seized up. Financial institutions had stopped loaning even to each other. If the credit markets had stayed frozen, it would have pushed us into a significantly deeper recession. They are now gradually thawing.

Whether people supported or opposed the plan depended greatly upon what they thought the plan was. Those that saw the plan as a "bailout to Wall Street" did not like it. Same for many conservatives who instinctively oppose goverment intervention in markets (for good reasons). Those who supported it were those that either tend to favor government intervention or realized that this was a financial crisis that required emergency measures to deal with it.

For the record, about 2/3rds of Democrats in Congress voted for the plan, while only about 1/3rd of Republicans did. In defense of conservatives that voted for it: when Tom Coburn, Paul Ryan, Larry Kudlow, and Steve Forbes support it, it can't be all bad. Those are 4 leading free market advocates.

"Rahmbo" and Republicans' fractured message

This week, Barack Obama's first act after Tuesday's election was to name Illinois Congressman Rahm Emanuel as his Chief of Staff. Now, remember that Obama has been preaching for two years about hope & change & a new type of politics. Yet he picks a man who has been nicknamed "Rahmbo" for his Chief of Staff. Rahm Emanuel received the moniker for his ruthlessly partisan politics (see IBD).

Says Obama: "No one I know is better at getting things done than Rahm Emanuel."

Republican House Minority Leader John Boehner put out a statment: “This is an ironic choice for a President-elect who has promised to change Washington, make politics more civil, and govern from the center."

Seems reasonable. This is not an issue the Republican's should dwell on, but taking the opportunity to point out the irony and hypocrisy of Obama is exactly what the Republican's should be doing. Yet, instead of hearing this same sentiment from all corners of the party, I have yet to hear another Republican elected official say a peep about it. Except, of course, Republican Senator Lindsey Graham, who like John McCain never seems to miss an opportunity to sabotage effective party message in order to promote what he considers to be bipartisanship. His statement: "Rahm knows Capitol Hill and has great political skills . . . He can be a tough partisan but also understands the need to work together."

Now think for a moment how the Democrats would be howling about partisanship if John McCain had won and named Tom "The Hammer" Delay as his chief of staff. The media would have picked up on it and it would have been a top story for a week. Keith Olbmerman would have considered it cause for McCain to resign in disgrace.

I know everyone says they want less partisanship and bitterness in politics, but do you think anyone would have complained if Lindsey Graham could have just kept his mouth shut and allowed a unified message to go out. Come on Lindsey, I'm not asking for you to go against any of your principles, I'm just asking that for once you don't go out of your way to undermine your own party (re: offshore drilling, enemy interrogation, calling law & order conservatives names because of their stance on illegal immigration, etc.).

2006 Income Tax Breakdown

www.taxfoundation.com is a great site for tax policy analysis.

For example, here is the Income Tax breakdown for 2006.

Among the highlights, the Top 1% now pay 40% of income taxes, despite only earning 22% of income. The Top 50% now pays over 97% of income taxes. If you earn over $32,000, you are in the Top 50%. If you earn over $65,000, you are in the Top 25%.

Obama and Taxes

Early on, Obama threw out several different figures for what he wanted to raise the capital gains rate to. I’ve heard 20%, 25%, and 28%. In the past several months, he has settled on 20%.

Obama wants to raise the top two income tax brackets from 33% to 36% and 35% to 39.6%. In 2008, the break point to jump into the 33% bracket for married filing jointly was $200,000. Unclear to me if Obama would move the break point up to $250,000.

In addition, he wants to remove the Payroll tax cap for those earning over $250,000. At first everyone assumed that would mean an additional 15.3% tax hike. Now Obama campaign is being purposely vague on how much they would raise payroll taxes for over $250K.

If Payroll cap was removed at full 15.3%, top marginal rate would raise to about 55%! On top of that, Obama wants to phase out some credits and deductions that effectively raise it even higher. We would suddenly have close to the highest top income tax rate in the world.

Just remember this. In 2006:

• Top 1% earned 22% of income, paid 40% of income taxes
• Top 10% earned 47% of income, paid 71% of income taxes
• Top 50% earned 87% of income, paid 97% of income taxes
• Bottom 50% earned 13% of income, paid 3% of income taxes
• Bottom 40% pay no income taxes

This is already a highly progressive income tax system. Obama would significantly increase the progressivity.

Obama wants to give $1000 refundable tax credit to everyone, including the bottom 40% who do not pay any income taxes. Obama calls it a tax cut off of workers’ payroll taxes. This would fundamentally change social security to a welfare program.

The worst part about Obama’s tax plan is that it raises effective marginal tax rates, and thus discourages productivity, at both ends, because he has many deductions and credits that phase out as income levels increase. That is, for lower income earners who do make enough to pay federal income taxes, as they start to make more money, they lose some of their deductions and credits. Combined with payroll taxes, effective marginal tax rates on a family of four making as low as $30,000 would be over 40%.

Biden's Gaffes

Democratic VP candidate Joe Biden said today, "I never make any big, big gaffes."

Well how big do they have to be, Senator? I wrote the following tongue-in-cheek comment at HotAir:

I believe Mr. Biden, I do. I happened to run into him at Home Depot and he was explaining how when the stock market crashed in 1929, President FDR didn’t just raise taxes and tarrifs to drive us from a recession into a depression. No, no no! He got on TV and explained the situation to the American public! Now that’s the leadership we need today.

I was interested in hearing more, so I followed him down to Katie’s restaurant and he told me all about how Article I of the Constitution defines the role of the VP, and Sarah Palin should know better than to think the VP is president of the Senate.

While there, we spotted a wheelchair-bound state senator, and Joe told him to "Stand Up, Chuck! Give a hug to your old Uncle Joe! Oh my God, what am I saying?”

After Chuck rolled off with a frown on his face, Mr. Biden confided in me (and the nearby undercover press) that he was pretty sure that at least one rogue world leader would test Obama in his 1st 6 months.

Then he paused and said, “I think Hillary would have been a better VP pick than me, but Barack picked me because I have a higher IQ.”

Explanations:

• The Home Depot reference is from the VP debate, where Biden tried to say he was down with middle class folk because he hung out at Home Depot a lot.
• A few weeks before that, he said in a Katie Couric interview that FDR had gotten on the TV and communicated directly to the American people what was going on with the stock market crash. Of course the stock market crash was in 1929 and FDR was not president until 1932. And TV's were not available for mass consumption for another decade after the crash.
• I had a previous post on Katie's restaurant. That was another reference Biden made to show he was just a regular Joe. Problem is Katie's Restaurant that he referred to was closed 15-20 years ago, highlighting how long he's been out of touch with the middle class, and what a bald-faced liar he is.
• In the VP debate, Biden said that Palin should know that the duties of the VP are layed out in Article I, the Executive. Of course, Article I of the constitution defines the role of the Legislative branch, and designates the VP as president of the Senate (role undefined other than votes to break a tie in the Senate). Article II defines the role of the Executive. Shocking ignorance from Biden, who is on the Senate Judiciary Committee.
• Somewhere on the campaign trail, there was a local state senator whose first name was Chuck, and Biden was thanking supporters like they always do at the start of campaign rally speeches. Biden introduced Chuck and then asked him to "Stand up" forgetting that he was wheelchair-bound. He quickly followed up by saying, "Oh my God, what am I say saying?"
• Just a few weeks before the election, Biden was speaking at a fundraiser and apparently forgot the press was there because he basically guaranteed that there would be a generated international crisis within 6 months. They would test Obama just like they did with young JFK, and the donors would need to keep backing them strongly, because it wouldn't be apparent that Obama was doing the right thing. I'm not kidding. He said it.
• Biden famously said several weeks after he was picked as VP that Hillary may have been a better pick than himself.
• Back when Biden was running for president in 1988, I think, he snapped back at a reporter who asked Biden about his college education that he had a higher IQ than the reporter, and went on to brag, making several flat-out untrue statements (saying he had full scholarship when he only had a small partial scholarship, saying he graduated at the top of his class when he graduated near the bottom, etc.)